To make the hole in the fabric you could use an X-Acto knife, side cutters, or a small pair of scissors. In this picture I'm using my newly made 5/16" diameter hole punch. Under the fabric is a piece of wood. Under the wood is a flat sided five pound hammer being used as an anvil. Under that anvil is a pair of hands of an assistant (with life in the balance), responsible for protecting the bodywork of my car when I hit the punch with a 12 ounce hammer. Since the rag top was already fastened to the top frame at this point, and the top frame was fastened to the body of the car, this method was easier than trying to get the fabric to a work bench, and we're only talking about doing 6 or 8 holes this way. If you had a pliers type hole punch, this would be a one handed job.

Under the tip of the punch here you can just see the new clean hole made in the fabric. You can also see the scrap bit of fabric from the operation still inside of the punch. Rotating the punch slightly for one last strike will nicely clip the last bit of fabric left by that gap in the punch.